A senior official who raised the alarm about possible financial irregularities in the case was switched to another role and her appeals ignored, according to MEPs.

The EU’s anti-fraud office, OLAF, confirmed last night that it has launched an investigation into the allegations – the latest in a series of ‘whistleblower’ cases in recent weeks involving EU institutions.

The official at the centre of the claims, Danish economist Dorte Schmidt-Brown, alleges that Luxembourg-based consultantcy Eurogramme was awarded the 250,000 euro contract only after providing a false financial picture of itself.

She claims the firm was allowed to keep the job, compiling European industrial production figures, despite an internal inquiry which backed her claims. Eurogramme is currently believed to have 12 contracts with Eurostat, worth 1.6 million euro.

She also alleges the company was overpaid and that it consistently failed to fulfil the terms of its contract.

Schmidt-Brown, who has been on sick leave since January 2001, was unavailable for comment yesterday.

But in confidential Commission papers – seen by European Voice – she claims that when she complained to her superiors about the matter she was subjected to “moral harassment” and forced to move to another Commission post.

She said her head of unit refused to speak to her and that she was “frozen” out of her job. “I was simply stressing the need for financial control of the contract but the behaviour of my head of unit was unacceptable,” she said.

MEPs say her treatment bears the hallmarks of similar cases, including the recent removal of Marta Andreasen, the accounting officer who highlighted flaws in the Commission’s accounting system, and that of Dougal Watt, who also went on sick leave after accusing his bosses at the European Court of Auditors of corrupt practices.

German member Gabriele Stauner told European Voice that the latest case also reminded her of the van Buitenen affair – a reference to the Dutch auditor whose fraud allegations triggered the downfall of the Santer Commission in 1999 – “when everything that could possibly be done to silence the critics was done”.

“In this case, when Schmidt-Brown protested, she was sidetracked and her appeals ignored.”

Stauner said that the Prodi Commission had not lived up to its pledge to root out fraud: “A clear picture is starting to emerge from this, the Andreasen case and that involving Watt. That is, if you have the courage to criticise your superiors, you run the risk of being kicked out of your job. It is highly disturbing and cannot be right.

“Unfortunately, I have little confidence in OLAF’s inquiry and shall be seeking permission for Schmidt-Brown to appear before the budget control committee. These are serious allegations and we need to know exactly what has happened here.”

Her comments were echoed by Austrian MEP Herbert Bosch, deputy chairman of the budget committee. He said: “These new allegations show that the Commission, in particular, has not learned from its past mistakes.”

A spokesman for Eurogramme, Edward Ojo, dismissed the Schmidt-Brown allegations as “malicious and untrue”.

“We have done absolutely nothing wrong and are cooperating fully with the investigating authorities,” he added.

Eric Mamer, spokesman for the Commission’s administrative reform chief Neil Kinnock, admitted there had been “difficulties” with Eurogramme, but that an internal inquiry had found Schmidt-Brown’s claims to be unsubstantiated.

He added: “We have over 20,000 staff and it would be an illusion to believe that some type of conflict doesn’t occur occasionally. However, what is important is that we have the procedures in place to deal with such matters.”